Solved
Why is payroll showing this error message? "You have either selected a tax liability account on a transaction where it's not allowed, or haven't specified a tax rate..."?
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I solved my issue.
QBO payroll automatically setup my Oregon state withholdings account, but created it as a "Sales Tax Payable" account instead of a "Payroll Tax Payable" account. I fixed it by creating a new "Payroll Tax Payable" account and updating the Tax liabilities accounts under Payroll Settings.
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